A gulf appears to have opened between Europe’s politicians and its central bankers and regulators about limiting or banning sovereign credit default swap trading.

German Chancellor Angela Merkel and French President Nicolas Sarkozy blame speculators in the CDS market for worsening the Greek government’s financial woes, although it’s unclear how they think that’s been achieved.

Both want rules limiting the use of sovereign CDS, ideally agreed upon by all G20 nations. They also want the European Commission to investigate the role of speculators in the $36 trillion CDS market. On top of that, European Commission President Jose Manuel Barroso said the commission is mulling an outright ban on CDS trades.

But many regulators and central bankers are urging restraint, warning limits or bans would be complicated to enact and could leave companies and investors unable to hedge legitimate risks.

Free financial markets have never appealed to a certain type of European politician and it isn’t hard to see why.

These people spend exhausting, Machiavellian years climbing the greasy poles of local, regional, national and European politics. During the ascent they promise plenty of cash for everyone, along with agreeably short working hours, and, indeed, working lives. These to be followed, they promise, by long, comfy retirements free from niggling worries about healthcare or housing.

Then, at the summit, settling down behind a Presidential or Prime Ministerial desk, they find all is not quite as they had hoped. No. Tiresome credit rating agencies and bond investors lie between them and as much State money as they like–‘Anglo Saxons’ most of them, too, to add insult to injury.

The financial crisis was Manna from Heaven for this lot; Anglo-Saxon market practices discredited and made to sit in the corner facing the wall; ‘bankers’ under suspicion, complex credit derivatives unmasked as charlatanry. Wonderful. Shackle the markets and fetch the keys to the treasury, would you?